Commercial Business Mortgage
“What Is A Commercial Business Mortgage?”
A commercial business mortgage has two different aspects that need to be defined to understand what exactly it is.
First of all, a commercial mortgage is a mortgage financing facility provided against a real estate property that is zoned for commercial use. Put another way, all properties that are not residential have some form of commercial or industrial zoning classification.
A commercial property can be owned by an individual or a company.
When the owner is a company, the mortgage effectively becomes a commercial business mortgage.
There are basically three different commercial property scenarios where lenders will be asked to provide a commercial mortgage: 1) commercial rental property; 2) owner occupied commercial property; 3) a combination of owner occupied and third party rental or lease.
Under each of these scenarios a commercial lender is going to review the financial statements of the business, the business credit, and the collateral offered as security.
There can be significant deviations in credit criteria from one type of property to another and from one region to another.
Because of the commercial use the takes place on these properties, and the larger investment dollars that can be associated with the average commercial property compared to the average residential property, a commercial mortgage lender is typically going to require considerable third party verification of key assessment items before being able to commit and fund any financing request.
The most common third party verifications include a commercial appraisal from an AACI certified appraiser, an environmental assessment from a recognized environmental consulting company, and accountant prepared financial statements with varying review levels depending on the size of the commercial business mortgage.
A commercial business mortgage can be used to acquire a property, consolidate debt, refinance and existing mortgage, fund a construction project, or provide incremental working capital to the business entity.
Because of the additional assessment work required for a business type mortgage, the lending process through a bank or institutional lender will typically take from 60 to 90 days, with private mortgage lenders falling more into the thirty day range, provided that any required information is readily available.
If you’re in need of a commercial business mortgage and would like to find out more about your options, your next step should be to work with an experienced commercial mortgage broker who can properly assess your situation and provide you with relevant commercial mortgage options for your consideration.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel